OrangeCobra Thanks for an intriguing and provocative essay. I agree with several key themes, including that we are making a mistake in formulating science in terms of a hypothetical view from nowhere. Your points regarding biological entities as being quintessentially engaged in the business of drawing distinctions between 'self' and 'other' and thus propagating themselves within an environment whose dynamics are predominantly aimed at erasing that boundary, and using gathered information to achieve this, are well made.
However, I'm not sure I see how this 'self-closed loop' (shades of Wheeler's 'self-excited circuit') can ever arise. After all, life seems a contingent feature of the universe: it might never have developed, and certainly there existed a point where it had not yet developed. If it is necessary to carve distinction from a quantum quagmire of relational possibility, it seems hard to see how a pre-living world ever could come to give rise to life, which itself depends on the existence of certain distinctions -- the right molecules being in the right places, and so on. Once the loop gets going, it seems plausibly self-sustaining; but it seems to have to be in place already to be first instantiated.
Also, I'm not quite clear on how, exactly, biological distinction-making is supposed to usurp physical dynamics. What exactly happens once we introduce a living system into Schrödinger's equation? One solution to this might be to just repudiate the applicability of such a picture: there is no 'world before life', there is no Schrödinger dynamics of living entities, because life itself is the precondition to having a description of the world which then obeys certain laws of physics. But this too seems to run into boundary issues: when is something alive enough to merit such special status?
Another possibility would be to conceive of quantum mechanics as a 'single user' theory, with classicality applying to only whatever living system is using the theory to formulate a description of its external world. There is a similarity, here, to French's recent revitalization of the phenomenological approach to quantum mechanics, albeit there it isn't just the fact of life, but that of having a certain kind of subjective experience that singles out the 'user' of quantum mechanics.
Indeed, one might worry that you're being a bit too quick in equating 'observer' and 'living being', here. Certainly one could conceive of entities that are not classically thought of as being biological -- e.g., robots -- yet might possess the ability to observe. In reducing biology to essentially the act of observation, it seems that much of what makes biology distinct from e.g. systems theory or the like is being lost.
Nevertheless, I enjoyed the essay also for not narrowly focusing on the same three or so effects of quantum mechanics in biology, but instead of framing a reductive bottom-up influence, investigating a more even-footed relationship between the two halves of this contest's topic. I hope it will do well!